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What Happens to Tenants after Foreclosure in Arizona

by Charlie Allred

Regardless of what your position is on the Arizona real estate market, We can all agree that going through a foreclosure is difficult.  Arizona, being one of the hardest hit states, with Michigan, Florida, Nevada and some parts of California being hard hit too, has become a hotbed of foreclosure activity.  The tremendous growth in Arizona during the real estate boom, many investors put money in Arizona rental properties.  Now, because those investors lost money on their investments the homes are being foreclosed even with paying tenants in those rentals.

These foreclosures end up at a trustee’s sale…  Tenants should be informed when the foreclosure or Trustee’s Sale is going to happen.  As a paying tenant you should told in writing by the landlord or told by law. The Trustee’s Sale information is always posted in or on the property in a visible area like a garage door, entry door or window.  Some landlords may keep their tenants in the dark regarding the Arizona foreclosure so they will continue to receive rental income.

The most common question tends to be: What happens to a tenant after a foreclosure has taken place? And, in all honesty, the answer to this question depends on the lease and the new buyer of the home at the Trustee’s Sale.  In the state of Arizona, there is a difference between an investor and new home buyer purchasing at the Trustee’s Sale.

A home buyer that plans to live in the newly acquired property once it is purchased must give the tenants 90 days to vacate the home.  The tenants, however, must actually be tenants- they can not be the foreclosed homeowner trying to act like a tenant to live free for 90 days!  So if you are in an Arizona foreclosed home it is prudent to have a copy of the original lease to avoid any confusion.

If, however, the home is purchased by an investor at the Trustee’s Sale, the new owner has to honor the lease agreements by law. And, if the home goes back to the lien holder of the property they are legally considered an investor in this scenario.  The lease must be active, and it must have been in place before the Trustee’s Sale.  If the lease is expired and you are on month to month terms, then the law may not apply.  Always be sure to have a copy of the lease readily available to avoid any issues.

Sometimes those who buy homes at Trustee’s Sales may try to get around the law.  It is not uncommon to be offered cash… sometimes up to $3000 to just vacate the home quickly.  It is usually up to the tenant on whether or not to accept the money, but you must weigh your options carefully because the new homeowner(s) may not be very easy to work with in these situations.  You must be informed so that you do not get pushed around. In this economy, people are finding that Arizona foreclosure is having an affect on their lives. Be sure you know the facts.

Learn more about Arizona foreclosure today.

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